WalletConnect, security features, and why you should simulate every DeFi transaction

Okay—real quick: WalletConnect is convenient. Really convenient. But convenience and security don’t automatically commute. If you’re an experienced DeFi user, you already know that the difference between a routine swap and a drained account can be one unchecked approval or one blind signature. This piece digs into how WalletConnect actually works, what the real threat vectors are, and how transaction simulation fits into a robust signing workflow.

First pass: WalletConnect is a protocol that lets a dApp talk to a wallet without the wallet running in the same process. You scan a QR or follow a deep link, a session is established, and the dApp asks the wallet to sign messages or transactions. That much is obvious. But the mechanics and tradeoffs underneath deserve a second look because they matter for security—especially when you’re doing large trades, interacting with bridges, or granting token approvals.

Brief technical sketch: WalletConnect (v1 and v2 are different beasts, v2 improves multi-chain and relay options) uses a relay server to pass encrypted messages between the dApp and the wallet. The wallet retains private keys; the dApp never gets them. Signing requests are serialized, pushed through the relay, and the wallet shows a UI for the user to approve. Simple flow, but you’ll want to inspect the metadata, session scopes, and chain IDs tightly—those are common levers attackers exploit.

Screenshot-style drawing of WalletConnect session flow: dApp -> relay -> wallet, with highlighted signing request” /></p> <h2>What WalletConnect protects—and what it doesn’t</h2> <p>WalletConnect’s main guarantee: private keys stay local. That is a strong baseline. But okay—pause—my instinct says that many people stop at that sentence and breathe easy. Don’t. Private keys are safe, but approvals and signed transactions can still authorize value transfer. So WalletConnect isn’t a magic bullet.</p> <p>Here are the practical attack surfaces you need to keep in mind:</p> <ul> <li>Phishing dApps: a malicious UI can trick you into signing dangerous calldata that looks normal.</li> <li>Overbroad allowances: one permit-like signature can give a contract unlimited spend power if you accept it.</li> <li>Chain switching / chain spoofing: a dApp might request signatures on a different chain ID than you expect.</li> <li>Replay and metadata leaks: while payloads are encrypted, metadata about sessions and endpoints can leak through relays depending on configuration.</li> <li>Relay trust: public relays reduce friction but centralize traffic; a compromised relay could observe session metadata and attempt targeted attacks (not private keys, but still useful info).</li> </ul> <p>So what do you, as a security-first DeFi operator, actually change about your behavior? Two main things: (1) treat every signature like a transferable authorizations contract until proven otherwise, and (2) simulate before you sign.</p> <h2>Transaction simulation—what it is and why it matters</h2> <p>Simulation means executing the intended transaction against a local or remote replica of blockchain state to see what will happen—without broadcasting anything. Think of it as a dry run. It can reveal reverts, unexpected token transfers, underlying contract logic that can change state in surprising ways, and subtle gas or nonce issues.</p> <p>There are several simulation flavors. The simplest is a static call (eth_call) against the current state; that shows reverts and return values but doesn’t model mempool effects or front-running. A better approach is to run the tx on a forked chain at a specific block height (using Hardhat, Foundry, or a simulator provider) to observe state transitions. Deeper simulations can model frontrunning or sandwich conditions by injecting hypothetical mempool orders.</p> <p>Why simulate? Because many attacks only become obvious when you actually execute logic against the real state: approvals that immediately transfer tokens via a backdoor. Or a contract that burns your tokens in a callback. Simulations catch those things before you sign.</p> <h2>How to use simulation in your signing flow</h2> <p>Here’s a practical workflow I use and recommend. It’s not perfect, but it reduces risk dramatically.</p> <ol> <li>Decode the transaction. If the dApp doesn’t show a human-readable explanation, decode the calldata (method + params) locally or via a trusted explorer.</li> <li>Check recipient and chain ID. Confirm the target contract address and the intended network match your expectation.</li> <li>Run a simulation on a forked state at the latest block. Observe token transfers, approvals, and any reverts. If it touches approvals, look carefully at allowance values.</li> <li>Estimate slippage, gas, and potential revert reasons. For complex batched transactions, simulate in pieces if possible.</li> <li>Limit approvals where possible. Use exact-amount approvals or permit patterns instead of unlimited allowances.</li> <li>Use a dedicated signing account for high-risk interactions (bridges, cross-chain routers), and keep main funds in a cold or hardware-backed account.</li> </ol> <p>One practical tip: choose a wallet that helps you decode calldata and simulate transactions as part of the approval UI. That extra visible context (a decoded method name, the token/destination unpacked) reduces surprises. If you want a wallet that emphasizes these surface protections, check out this wallet resource: <a href=https://sites.google.com/rabby-wallet-extension.com/rabby-wallet-official-site/

Developer considerations: what dApps should do

On the dApp side, if you’re building one, design the UX to reduce blind signing:

  • Request only the scopes you need from WalletConnect and present clear descriptions.
  • Use EIP-712 typed data for critical approvals so wallets can show structured, readable content.
  • Include a server-side simulation endpoint that clients can call to preview user-visible outcomes, especially for complex routers.
  • Prefer granular methods (single-approve amounts, permit) instead of bulk unlimited approvals.

On a protocol level, adding machine-readable metadata to transactions—so wallets can simulate and display effects—makes the ecosystem safer. Honestly, this part bugs me because many teams skip it in favor of speed to market.

Limitations of simulation (be realistic)

Simulations help, but they aren’t omniscient. They can miss:

  • Real-world mempool ordering and MEV front-running that depends on latency and relayer relationships.
  • Oracles that update between simulation and execution, changing the economic outcome.
  • Off-chain components like oracles or timelocks that may behave differently in production.

So: simulate, yes. But also use layered defenses: limit approvals, hardware-sign for large ops, and revoke unused allowances regularly.

Frequently asked questions

Q: Does WalletConnect ever send my private key to the dApp?

A: No. WalletConnect transmits signing requests; keys remain in your wallet. The risk comes from what you sign, not where the private key is stored.

Q: How reliable are transaction simulations?

A: Very useful but not perfect. Simulations catch logical errors and many exploit patterns, but they can’t perfectly model MEV or race conditions. Use them as a gate, not a guarantee.

Q: How do I revoke a WalletConnect session or approvals if something looks wrong?

A: Revoke the session in your wallet immediately, remove the dApp connection, and use token-revocation tools (or on-chain revoke calls) to clear allowances. For high-value compromises, move funds to a new wallet with fresh keys.

Share this post with your friends

Back to News

Hope Newsletter

Stay current with news and receive our weekly Bible reading plan.

Hope Church

1234 Church Street

Albuquerque, NM 87112​

Get Directions
Office
• M - F from 9 am to 5 pm
• 555-987-6543
• office@churchemail.com

Our mission is to live out the truth of God’s love, and to serve our community.

Facebook Twitter Youtube
Sunday Services at 9:00am and 10:30am PST

© 2020 Hope Church • All Rights Reserved • Site Map • Privacy Policy